## What it is and how to use it

**What is it?**

The Relative Volatility Index (RVI) is similar to the Relative Strength Index (RSI), but instead of measuring price momentum, it measures the direction of volatility. It calculates the standard deviation of price changes and indicates whether volatility is increasing or decreasing. RVI above 50 indicates increasing volatility, while below 50 indicates decreasing volatility.

**Who made it?**

The Relative Volatility Index was developed by Donald Dorsey in the early 1990s.

**How is it calculated?**

The formula for Relative Volatility Index (RVI) is:

**RVI = 100 * EMA(upward_volatility, N) / (EMA(upward_volatility, N) + EMA(downward_volatility, N))**

Where:

upward_volatility is the standard deviation of positive price changes.

downward_volatility is the standard deviation of negative price changes.

N is the number of periods.

**Code (ProRealTime)**

**How do you use it?**

Relative Volatility Index can be used in several ways:

**Volatility Measurement: **

Use RVI to determine whether volatility is increasing or decreasing. Values above 50 indicate increasing volatility, while values below 50 indicate decreasing volatility.

**Trend Confirmation:**

RVI helps you confirm price movements by analyzing volatility. For example, increasing volatility during a price uptrend can indicate a strong bullish trend.

**Risk Management: **

Adjust your trading strategies based on volatility trends, helping you manage risk more effectively.

**FAQ**

**Q: Is RVI a leading or lagging indicator?**

A: RVI is a lagging indicator. It measures the direction of volatility, helping you identify potential trend reversals.

**Q: What are the best settings for RVI?**

A: The default setting for RVI is 14 periods. You can adjust this based on your trading strategy and the asset you're analyzing.

**Q: How can RVI be used to improve trading?**

A: RVI helps you spot changes in volatility, providing potential entry and exit points. It's a useful tool for confirming trends and identifying reversals.

**Strategies using Relative Volatility Index**

None so far.